The Hidden Costs of Buying Property in Abu Dhabi: A Guide to Essential Service Fees

Introduction

Buying property in Abu Dhabi can be an attractive investment, with high-quality developments, growing infrastructure, and a stable real estate market. However, it’s crucial for potential buyers and investors to understand the various service fees associated with purchasing property in this dynamic market. These fees can significantly impact the overall cost of acquisition, and understanding them upfront can help ensure a smooth and financially sound investment journey.

1. Sale and Purchase Fees

One of the most substantial costs when purchasing property in Abu Dhabi is the sale and purchase fee. This fee is typically split equally between the buyer and seller and ranges from 1% to 4% of the property’s value. For instance, on an AED 1 million property, each party might contribute AED 20,000 toward this fee. It’s important to budget for this additional cost, as it can add up quickly, especially for high-value properties.

2. Musataha and Usufruct Fees

Musataha and usufruct agreements are unique to certain regions and allow for long-term usage rights on property (typically 10 to 50 years). In Abu Dhabi, a fixed fee of 4% applies to the value of these rights, which must be considered for those entering into these agreements. 

These fees help secure the legal right to use the land while preserving ownership for the original holder, making them essential for investors looking to secure long-term investments.

3. White Land Tax

Though not yet implemented, the white land tax is an expected annual levy on undeveloped commercial and industrial land. Once introduced, this tax will likely range from 1% to 4% of the land’s value. This tax is aimed at encouraging development and reducing land hoarding, so buyers should consider the potential for this additional cost if they plan to purchase undeveloped plots.

4. Infrastructure Fee

For those purchasing commercial or investment land, the infrastructure fee helps fund essential utilities and infrastructure development across Abu Dhabi. The cost varies by region, with a rate of AED 100 per square meter in Abu Dhabi city and lower rates in surrounding areas. 

This fee ensures that the necessary infrastructure is in place to support business operations and long-term investment value.

5. Mortgage Fees

If financing is required for the property purchase, mortgage fees will be an additional cost to consider. Although specific details were not provided, mortgage fees generally cover application and processing expenses associated with obtaining a loan for property investment. 

This cost can vary based on the lender and mortgage structure, so it’s wise to consult with a financial advisor or mortgage specialist to understand the full scope of these fees.

Check: How To Calculate Mortgage in UAE

6. Agent Fees (Optional)

Real estate agents may charge a fee for their services in helping buyers secure the right property and navigate the buying process. This is an optional but often beneficial service, particularly for first-time buyers or international investors unfamiliar with the local market. 

Agent fees vary based on the agent and level of service provided, so researching reputable agents and their fee structures can help buyers make an informed decision.

Check: Our Expert Agents

7. Other Fees

Additional fees may apply, including registration charges and administrative fees. These charges are typically associated with the formal registration of the property and paperwork processing, ensuring compliance with legal and regulatory standards. 

Although these fees are usually smaller than others mentioned, they’re still important to include in the overall budget.

Final Thoughts

Understanding the full range of service fees is essential for buyers and investors aiming to make informed decisions when purchasing property in Abu Dhabi. These costs can influence the long-term financial viability of an investment, so taking the time to plan for them can make the difference between a smooth purchase and unexpected expenses. With careful budgeting and awareness of the fees involved, buyers can confidently navigate Abu Dhabi’s real estate market and secure valuable assets in this vibrant city.